Google Parent Alphabet’s Q1 Earnings Beat Expectations
Alphabet, Google’s parent company, reported first-quarter earnings and revenue that surpassed Wall Street’s consensus expectations, driving its stock higher in after-hours trading. CEO Sundar Pichai highlighted the company’s artificial intelligence (AI) initiatives, particularly the success of Gemini 2.5, its most powerful large language model.
The company’s core search business was up nearly 10%, while Google Cloud saw a 28% gain in sales. AI Overviews in search have reached 1.5 billion monthly users, and the company recently launched AI Mode, an experimental feature allowing for more complex queries. Pichai noted that usage growth is increasing as people find search more useful for their queries.
Key Financial Highlights
- Revenue rose 12% to $90.2 billion year over year
- Net income increased 46% to $34.5 billion, or $2.81 per share
- Google Search revenue grew 10% to $50.7 billion
- YouTube advertising revenues increased 10% to $8.9 billion
- Google Cloud revenue jumped 28% to $12.3 billion
Pichai also highlighted progress at Waymo, Alphabet’s autonomous vehicle subsidiary, which is now serving over 250,000 paid passenger trips weekly. The company is considering selling Waymo vehicles to personal users in the future.
Challenges Ahead
Despite the positive earnings report, Alphabet noted potential headwinds, including the closing of the ‘de minimis’ loophole by the Trump administration on May 2, which could impact Asian sellers using the postal network for imports. Bank of America Global Research analysts expressed concerns about a potential negative tariff ad spend impact and growing competitor AI traffic.
The company’s significant investments in infrastructure, with capital expenditures reaching $17.2 billion in Q1, are expected to continue putting pressure on financials through increased depreciation. Alphabet plans to invest about $75 billion in capex for the full year 2025.
As the company moves forward with its AI initiatives and expansion in various sectors, the market will be watching closely to see how these strategies play out in the face of potential challenges.
